RAHUL SHAH, M.D., v. AETNA

Filing 15

MEMORANDUM OPINION FILED. Signed by Judge Jerome B. Simandle on 7/6/17. (js)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

RAHUL SHAH, MD on assignment of
LORRAINE J.,
Plaintiff,

HONORABLE JEROME B. SIMANDLE

Civil Action
No. 17-195 (JBS/JS)

v.
MEMORANDUM OPINION

AETNA,
Defendant.
SIMANDLE, District Judge:

This dispute arises from Defendant Aetna Life Insurance’s
(“Aetna”) alleged refusal to fully reimburse Plaintiff Dr. Rahul
Shah for medical services provided to Lorraine J., a patient who
is a member of an Aetna health insurance plan. Before the Court
is Defendant’s partial motion to dismiss counts one, three, and
four of the Complaint pursuant to Fed. R. Civ. P. 12(b)(6).
[Docket Item 5.] For the reasons that follow, the Court will
grant in part and deny in part Aetna’s motion.
The Court finds as follows:
1.

Factual and Procedural Background. The facts of this

case are straightforward.1 On December 28, 2015, Dr. Shah
performed back surgery to Lorraine J., a patient who holds a
health benefit plan administered by Aetna. (Complaint ¶¶ 3-6,

1

The Court accepts as true for the purposes of the instant
motions the following facts as alleged in the Complaint.

12.)2 Dr. Shah prepared a Health Insurance Claim Form (“HICF”)
demanding reimbursement from Aetna in the amount of $210,915 for
those services, but Aetna has paid only $37,650 for the
patient’s treatment. (Id. ¶¶ 7-8.) Dr. Shah alleges that he is
entitled to the $173,265 difference under the terms of his
patient’s plan. (See generally id.) The parties agree that the
health benefit plan at issue is governed by the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et
seq. (“ERISA”).
2.

After engaging in Aetna’s administrative appeals

process, Dr. Shah filed a four-count complaint in the Superior
Court of New Jersey, Law Division, Cumberland County, which
Aetna timely removed. [Docket Item 1.] The Complaint brings
causes of action for (1) breach of contract, (2) denial of
benefits under § 1132(a)(1)(B), (3) breach of fiduciary duty in
violation of § 1132(a)(3), and (4) failure to maintain
reasonable claims procedures pursuant to 29 C.F.R. 2560.503-1.
In lieu of an answer, Aetna moves to dismiss counts one,3 three,

2

Dr. Shah purportedly obtained an assignment of benefits from
Lorraine J., allowing him to sue his patient’s insurer under
ERISA. (Id. ¶ 6.) Because Aetna does not challenge the
sufficiency of the assignment, the Court presumes that Dr. Shah
has standing to sue as a “participant or beneficiary” of an
ERISA plan administered by Aetna.
3 Dr. Shah voluntarily dismissed the state law breach of contract
claim in count one, conceding that it is preempted by ERISA.
(Pl. Br. at 1.) The Court will dismiss this claim pursuant to
2 

and four of the Complaint [Docket Item 5], which motion is now
fully briefed and will be decided without oral argument pursuant
to Fed. R. Civ. P. 78.
3.

Standard of Review. Pursuant to Rule 8(a)(2), Fed. R.

Civ. P., a complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief.” Specific facts are not required, and “the statement
need only ‘give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests.’” Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (citations omitted).

While a

complaint is not required to contain detailed factual
allegations, the plaintiff must provide the “grounds” of her
“entitle[ment] to relief,” which requires more than mere labels
and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007).
4.

A motion to dismiss under Rule 12(b)(6), Fed. R. Civ.

P., may be granted only if, accepting all well-pleaded
allegations in the complaint as true and viewing them in the
light most favorable to the plaintiff, a court concludes that
the plaintiff failed to set forth fair notice of what the claim
is and the grounds upon which it rests. Id.

A complaint will

survive a motion to dismiss if it contains sufficient factual

Fed. R. Civ. P. 41(a), and dismiss Aetna’s motion to dismiss as
moot as to count one.
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matter to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).

Although a

court must accept as true all factual allegations in a
complaint, that tenet is “inapplicable to legal conclusions,”
and “[a] pleading that offers labels and conclusions or a
formulaic recitation of the elements of a cause of action will
not do.” Id. at 678
5.

Discussion. Aetna argues that Dr. Shah’s claims of

breach of fiduciary duty and failure to maintain reasonable
claims procedures must be dismissed because “Plaintiff cannot
seek or obtain the requested relief” plead in those causes of
action. The Court will address both of these points in turn.
6.

Count three of the Complaint, pursuant to 29 U.S.C. §

1132(a)(3) (ERISA § 502(a)(3)), alleges that Aetna breached its
fiduciary duty owed under ERISA by
failing to issue an Adverse Benefit Determination in
accordance with the requirements of ERISA and applicable
regulations; participating knowingly in, or knowingly
undertaking to conceal, an act or omission of such other
fiduciary, knowing such act or omission is a breach;
failing
to
make
reasonable
efforts
under
the
circumstances to remedy the breach of such other
fiduciary; and wrongfully withholding money belonging to
Plaintiff.
(Compl. ¶ 38.) Dr. Shah seeks as relief for this cause of action
reimbursement for medical benefits owed under the plan and “such
other and further relief as the Court may deem just and
equitable.” (Id.) Aetna argues that this claim must be dismissed
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because it essentially seeks only legal, monetary relief that is
duplicative of the claim for benefits (count two), while a
breach of fiduciary duty under ERISA permits only equitable
relief. In opposition, Dr. Shah asserts that this claim should
be allowed to move forward because he also seeks “other
appropriate equitable relief,” and to dismiss the § 502(a)(3)
claim as duplicative before adjudicating the merits of his
benefits claim would be premature.
7.

The Court agrees with Dr. Shah, and with other courts

in this District, that dismissal of an ERISA breach of fiduciary
duty claim on this basis is not appropriate at this early
procedural stage. DeVito v. Aetna, Inc., 536 F. Supp. 2d 523,
533-34 (D.N.J. 2008); see also Beye v. Horizon Blue Cross Blue
Shield of New Jersey, 568 F. Supp. 2d 556, 574-75 (D.N.J. 2008)
(same); Shah v. Horizon Blue Cross Blue Shield, Civil No. 162528, 2017 WL 680292, at *3 (D.N.J. Feb. 21, 2017) (same); Ross
v. AXA Equitable Life Ins. Co., Civil No., 2016 WL 7462542
(D.N.J. Dec. 28, 2106) (same); HUMC Opco LLC v. United Benefit
Fund, Civil No. 16-168, 2016 WL 6634878, at *4 (D.N.J. Nov. 7,
2016) (same); Rahul Shah v. Horizon Blue Cross Blue Shield,
Civil No. 15-8590, 2016 WL 4499551, at *10 (D.N.J. Aug. 25,
2016) (same). Nevertheless, “the Court will not permit a [breach
of fiduciary duty] claim to duplicate the relief theories of [a
benefits claim] at the appropriate stage of the litigation.”
5 

Shah, 2016 WL 4499551, at *10 (emphasis added). Aetna may renew
this challenge to the redundancy of Dr. Shah’s claims on summary
judgment, and at that time it will be Dr. Shah’s burden to
distinguish the gravamen of his claim in count three from that
in count two. Lipstein v. UnitedHealth Group, 296 F.R.D. 279,
298 (D.N.J. 2013). For this reason, Aetna’s motion to dismiss
will be denied without prejudice as to count three of the
Complaint.
8.

Count four of the Complaint alleges that Aetna failed

to establish and maintain a reasonable claims procedures under
29 C.F.R. 2560.503-1. (Compl. ¶¶ 39-47.) That regulation sets
forth minimum disclosure requirements for an employee benefit
plan under ERISA and requires, inter alia, that a plan
administrator provide written notice of a benefit determination,
the specific reasons for any adverse determination, and the time
limits and appeal procedures for any adverse determinations “in
a manner calculated to be understood by the claimant.” 29 C.F.R.
2560.5031-1(g). Dr. Shah does not allege which specific
disclosure requirements of the claims procedure Aetna violated
in its denial of benefits for Lorraine J. (See generally Compl.)
Aetna argues that this claim fails as a matter of law because
neither 29 C.F.R. 2560.503-1 nor its accompanying statute, 29
U.S.C. § 1133 (ERISA § 503), establish a private right of action

6 

for a failure to comply with the regulatory disclosure
requirements. The Court agrees.
9.

The Third Circuit has observed that § 503 and its

regulations “set[] forth only the disclosure obligations of ‘the
Plan’ and . . . do[] not establish that those obligations are
enforceable through the sanctions of ERISA’s civil enforcement
provision.” Syed v. Hercules, Inc., 214 F.3d 155, 162 (3d Cir.
2000); see also Ashenbaugh v. Crucible Inc., 1975 Salaried Ret.
Plan, 854 F.2d 1516, 1532 (3d Cir. 1988) (discussing “the
general principle that an employer’s or plan’s failure to comply
with ERISA’s procedural requirements does not entitle a claimant
to a substantive remedy.”). “[T]he remedy for a violation of §
503 is to remand to the plan administrator so the claimant gets
the benefit of a full and fair review.” Syed, 854 F.2d at 1532.
From this, courts in this District have found that § 1133 and 29
C.F.R. 2560.503-1 do not create a private cause of action and
have dismissed claims identical to Dr. Shah’s as legally
insufficient. See Bloomfield Surgical Center v. Cigna Health and
Life Ins. Co., Civil No. 16-8642, 2017 WL 2304642, at *3 (D.N.J.
May 25, 2017) (“Courts in this District have also explicitly
found that 29 C.F.R. 2560.503-2 does not create a private cause
of action.”); Shah v. Horizon Blue Cross Blue Shield of Mass.,
Civil No. 16-5946, 2017 WL 1745608, at *2 (D.N.J. May 4, 2017)
(same); Shah, 2017 WL 680292, at *2-*3 (same); Shah, 2016 WL
7 

4499551, at *11 (same); Drzala v. Horizon Blue Cross Blue
Shield, Civil No. 15-8392, 2016 WL 2932545, at *5 (D.N.J. May
18, 2106) (same); Cohen v. Horizon Blue Cross Blue Shield of New
Jersey, Civil No. 13-3057, 2013 WL 5780815, at *9 (D.N.J. Oct.
25, 2013).
10.

In opposition, Dr. Shah argues that his cause of

action under 29 C.F.R. 2560.503-1 is not foreclosed because he
seeks equitable relief, including “an Order that . . . Plaintiff
is deemed to have exhausted all required administrative
remedies” rather than compensatory damages. (Pl. Br. at 4.) But
Dr. Shah’s position ignores binding Third Circuit precedent that
“the remedy for a violation of § 503 is to remand to the plan
administrator so the claimant gets the benefit of a full and
fair review.” Syed, 854 F.2d at 1532. Dr. Shah’s requested
relief, equitable though it may be, is not available for a
violation of 29 C.F.R. 2560.503-1.
11.

For these reasons, the Court will grant Aetna’s motion

to dismiss with respect to count four.4 Because this cause of
action is legally insufficient, and not merely factually
insufficient, any amendment will be futile and Plaintiff will

4

Because this Court finds that 29 C.F.R. 2560.503-1 does not
create a private cause of action, it need not address whether
these allegations are sufficiently detailed to satisfy Twombly.
(Def. Reply at 3.)
8 

not be permitted leave to amend. United States ex rel. Schumann
v. Astrazeneca Pharma. L.P., 769 F.3d 837, 849 (3d Cir. 2014).
12.

Conclusion. The accompanying Order shall be entered.

July 6, 2017
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

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